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HomeMy WebLinkAboutORD 92-22 ORDINANCE AUTHORIZING THE ISSUANCE OF THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM JUNIOR LIEN REVENUE BONDS, SERIES 1992; AND CONTAINING OTHER MATTERS RELATED THERETO THE STATE OF TEXAS § COUNTY OF JEFFERSON § THE CITY OF BEAUMONT § WHEREAS, the City of Beaumont, Texas (the "City" ) is authorized, pursuant to Articles 1111 et seq. , Vernon' s Annotated Texas Civil Statutes, as amended, to issue junior lien bonds payable from the net revenues of its waterworks and sewer system and to issue such junior lien bonds, without an election, for money for acquisitions, extensions, construction, improvement or repair of such system; and WHEREAS, the City now desires to issue junior lien bonds in order to provide for certain acquisitions, extensions, construction, improvement or repair of its waterworks and sewer system and has given notice as required by Chapter 252 of the Texas Local Government Code, as amended, and Article 2368a, Vernon' s Annotated Texas Civil Statutes, as amended, of its intention to issue such junior lien bonds as hereinafter authorized and has not received any petitions for a referendum concerning issuance of such junior lien bonds; Now, Therefore, BE IT ORDAINED BY THE CITY OF BEAUMONT: 1 . Definitions . Throughout this Ordinance, the following terms and expressions as used herein shall have the meanings set forth below The term "Additional Junior Lien Bonds" shall mean the additional Junior Lien Bonds permitted to be issued by the City pursuant to Section 20 of this Ordinance, Section 20 of the Outstanding Prior Lien Bond Ordinance, and Section 6 . 1 of the Outstanding Junior Lien Bond Ordinance. The term "Additional Prior Lien Bonds" shall mean the additional Prior Lien Bonds permitted to be issued by the City pursuant to Section 20 of this Ordinance, Section 20 of the Outstanding Prior Lien Bond Ordinance, and Section 6 . 1 of the Outstanding Junior Lien Bond Ordinance. The term "Annual Principal and Interest Requirements" shall mean, with respect to Prior Lien Bonds, Junior Lien Bonds, or any one or more series thereof, and with respect to any Fiscal Year, all payments of principal and interest scheduled to become due during such Fiscal Year by reason of an interest payment date or a maturity or mandatory redemption date occurring after the date of calculation. The term "Average Annual Principal and Interest Requirements" shall mean, with respect to any series of Prior Lien Bonds or Junior Lien Bonds (including the Bonds) , an amount calculated by dividing the total Annual Principal and Interest Requirements on such bonds by the number of Fiscal Years remaining until the last maturity of such bonds . The term "Bond Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of, and the principal amounts of the Bonds registered to, each Owner. The term "Bonds" shall mean the $20,000, 000 The City of Beaumont, Texas, Waterworks and Sewer System Junior Lien Revenue Bonds, Series 1992, authorized in this Ordinance, unless the context clearly indicates otherwise. The Bonds constitute "Additional Junior Lien Bonds" within the meaning of the Outstanding Prior Lien Bond Ordinance and the Outstanding Junior Lien Bond Ordinance. The term "Business Day" shall mean any day which is not a Saturday, Sunday, a day on which the Registrar is authorized by law or executive order to close, or a legal holiday. The term "City" shall mean The City of Beaumont, Texas, and, where appropriate, the City Council thereof and any successor to the City as owner of the System. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. The term "Construction Fund" shall mean the fund so designated which is created and established pursuant to Section 19 (e) of this Ordinance. The term "Escrow Agreement" shall mean that certain Escrow Agreement dated as of April 1, 1992 , between the City and Ameritrust Texas, N.A. , Houston, Texas, as Escrow Agent. The term "Financial Guaranty Agreement" shall mean a financial guaranty agreement between the City and an Insurer providing for issuance of a Qualified Surety Bond, payment of any premiums therefor, and reimbursement of any amounts advanced thereunder. The term "Fiscal Year" shall mean the City' s fiscal year which currently runs from October 1 to September 30, but which may be changed from time to time by the City. The term "Gross Revenues" shall mean all revenues, income and receipts of every nature derived or received by the City from the operation and ownership of the System (but excluding any -2- utility deposits) , the interest income from the investment or deposit of money in the Revenue Fund, the Prior Lien Bond Interest and Sinking Fund, the Prior Lien Bond Reserve Fund, the Junior Lien Bond Interest and Sinking Fund, the Junior Lien Bond Reserve Fund and any other revenues hereafter pledged to the payment of Prior Lien Bonds and Junior Lien Bonds . The term "Holder" or "holders" shall mean the owner or owners, as the case may be, of one or more Bonds . The term "Insurer" shall mean any insurance company which issues a Qualified Surety Bond and which has been rated in the highest rating category by A. M. Best & Company, Standard & Poor' s Corporation or Moody' s Investors Services, Inc. The term "Interest Payment Date" , when used in connection with any Bond, shall mean September 1, 1992 , and each March 1 and September 1 thereafter until maturity or earlier redemption of such Bond. The term "Issuance Date" , with respect to the Bonds initially delivered to TWDB, shall mean the date on which each such Bond is authenticated by the Registrar and delivered to and paid for by TWDB. Bonds delivered upon transfer of or in exchange for other Bonds shall bear the same Issuance Date as the Bond or Bonds in lieu of or in exchange for which the new Bond or Bonds may be delivered. The term "Junior Lien Bonds" shall mean The City of Beaumont, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 1981, issued in the original principal amount of $3, 740, 000, The City of Beaumont, Texas, Combination Tax and Revenue Certificates of Obligation, Series 1990, issued in the original principal amount of $5,000,000, the Bonds authorized by this Ordinance, and all Additional Junior Lien Bonds which may be hereafter issued. The term "Junior Lien Bond and Interest Sinking Fund" shall mean the Interest and Sinking Fund which has been established under the Outstanding Junior Lien Bond Ordinance and which shall be maintained and accounted for as herein and therein provided. The term "Junior Lien Bond Reserve Fund" shall mean the Reserve Fund which has been established under the Outstanding Junior Lien Bond Ordinance and which shall be maintained and accounted for as herein and therein provided. The term "Junior Lien Bond Reserve Fund Requirement" shall mean, with respect to any series of Junior Lien Bonds, the Average Annual Principal and Interest Requirements on the respective series, provided that in no event shall such requirements exceed 14% of the sum of the following for each -3- series of Junior Lien Bonds then outstanding; the original face amount of such series or, if the original proceeds of such series (as defined in the Code and the Treasury Regulations promulgated thereunder) are less than 98% of the original face amount thereof, then the original proceeds of such series . The term "Maintenance and Operation Expenses" shall mean the reasonable and necessary expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs and extensions necessary to render efficient service (but only such repairs and extensions as, in the judgment of the governing body of the City, are necessary to keep the System in operation and render adequate service to the City and the inhabitants thereof, or such as might be necessary to meet some physical accident or conditions which would otherwise impair the Prior Lien Bonds or Junior Lien Bonds) , and all payments under contracts now or hereafter defined as operating expenses by the Legislature of the State of Texas . Depreciation shall never be considered as a Maintenance and Operation Expense. The term "Net Revenues" shall mean all Gross Revenues remaining after deducting the Maintenance and Operation Expenses . The term "Ordinance" as used herein and in the Bonds shall mean this ordinance authorizing the Bonds . The term "Outstanding Certificate of Obligation Ordinance" shall mean the ordinance pursuant to which the City issued its Combination Tax and Revenue Certificates of Obligation, Series 1990, in the original principal amount of $5,000, 000 . The term "Outstanding Junior Lien Bond Ordinance" shall mean the ordinance pursuant to which the City issued its Waterworks and Sewer System Revenue Refunding Bonds, Series 1981, in the original principal amount of $3,740,000 . The term "Outstanding Prior Lien Bond Ordinance" shall mean the ordinance pursuant to which the City issued its Waterworks and Sewer System Revenue and Refunding Bonds, Series 1989 , in the original principal amount of $16,840, 000 . The term "Owner" shall mean any person who shall be the registered owner of any outstanding Bonds . The term "Paying Agent" shall mean the Registrar. The term "Prior Lien Bonds" shall mean The City of Beaumont, Texas, Waterworks and Sewer System Revenue and Refunding Bonds, Series 1989 , issued in the original principal amount of $16, 840,000, and each series of Additional Prior Lien Bonds from time to time hereafter issued, but only to the extent such Prior Lien Bonds remain outstanding within the meaning of this -4- Ordinance. The term "Prior Lien Bond Interest and Sinking Fund" shall mean the fund which has been established pursuant to Section 19 of the Outstanding Prior Lien Bond Ordinance and which shall be maintained and accounted for as therein provided. The term "Prior Lien Bond Reserve Fund" shall mean the fund which has been established pursuant to Section 19 of the Outstanding Prior Lien Bond Ordinance and which shall be maintained and accounted for as therein provided. The term "Prior Lien Bond Reserve Fund Requirement" shall mean, with respect to any series of Prior Lien Bonds, an amount equal to the Average Annual Principal and Interest Requirement on the respective series . The term "Qualified Surety Bond" shall mean any surety bond which is issued by an Insurer and which provides that if insufficient amounts are on deposit in the Junior Lien Bond Reserve Fund for transfer to the Junior Lien Bond Interest and Sinking Fund in order to pay when due principal of and interest on the Bonds issued pursuant to this Ordinance, the Insurer shall deposit in the Junior Lien Bond Reserve Fund an amount equal to the face amount of the surety bond less any unreimbursed deposits previously made by the Insurer thereunder. The term "Record Date" shall mean the fifteenth ( 15th) calendar day of the month next preceding each Interest Payment Date. The term "Registrar" shall mean Ameritrust Texas, N.A. , Houston, Texas, and its successors in that capacity. The term "Revenue Fund" shall mean the Revenue Fund which has been established under the Outstanding Prior Lien Bond Ordinance and the Outstanding Junior Lien Bond Ordinance and which shall be maintained and accounted for as herein and therein provided. The term "Special Project" shall mean, to the extent permitted by law, any property, improvement or facility declared by the City not to be part of the System and substantially all of the costs of the acquisition, construction and installation of which is paid from proceeds of a financing transaction other than the issuance of Prior Lien Bonds, Junior Lien Bonds or other bonds payable from ad valorem taxes or revenues of the System and for which all maintenance and operation expenses are payable from sources other than ad valorem taxes or revenues of the System, but only to the extent that and for so long as all or any part of the revenues or proceeds of which are or will be pledged to secure the payment or repayment of such costs of acquisition, -5- construction and installation under such financing transaction. The term "System" shall mean all properties, facilities, improvements, equipment, interest, rights and powers constituting the waterworks and sewer system of the City, including all future extensions, replacements, betterments, additions, improvements, enlargements, acquisitions, purchases and repairs to the System, but excluding all Special Projects . The term "TWDB" shall mean the Texas Water Development Board. 2 . Interpretations . All definitions of terms used herein and all pronouns used in this Ordinance shall be deemed to apply equally to singular and plural and to all genders . The titles and headings of the sections of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof . This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Bonds and the validity of the lien on and pledge of the Net Revenues to secure the payment of the Bonds . 3 . Authorization. The Bonds shall be issued in fully registered form in the total authorized aggregate amount of TWENTY MILLION AND N01100 DOLLARS ($20,000, 000 . 00) for the purposes of ( i) providing money for acquisitions, extensions, construction, improvement, or repair of the System, and ( ii) paying all costs of issuance of the Bonds . 4 . Designation, Date, and Interest Payment Dates. The Bonds shall be designated as "THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM JUNIOR LIEN REVENUE BONDS, SERIES 1992" and shall be dated April 1, 1992 . The Bonds shall bear interest at the rates set forth in Section 5 below from the later of the Issuance Date, or the most recent Interest Payment Date to which such interest has been paid or duly provided for, calculated on the basis of a 360-day year of twelve 30 day months, payable on September 1, 1992, and semiannually thereafter on March 1 and September 1 of each year until maturity or prior redemption. 5 . Initial Bonds; Numbers and Denominations . The Bonds to be initially delivered to the TWDB shall bear the numbers, be in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance. The Bonds shall mature, in accordance with this Ordinance, on September 1 in each of the years and in the amounts set out in such schedule. Bonds delivered in transfer of or in exchange for other Bonds shall be numbered (with appropriate prefix) in order of their -6- authentication by the Registrar, shall be in the denomination of $5, 000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Bond or Bonds in lieu of which they are delivered. BONDS Bond Principal Interest Number Year Amount Rate R- 1 1993 $ 180,000 5 .50% R- 2 1994 190,000 5.50% R- 3 1995 200,000 5 .50% R- 4 1996 215,000 5 .50% R- 5 1997 225,000 5 .50% R- 6 1998 235,000 5 .50% R- 7 1999 255,000 5 . 50% R- 8 2000 270, 000 5 . 50% R- 9 2001 285, 000 5 . 50% R-10 2002 295 , 000 5 .50% R-11 2003 315, 000 5 .50% R-12 2004 335, 000 5 .50% R-13 2005 1, 750, 000 5 .50% R-14 2006 1,845, 000 5 .50% R-15 2007 1,945, 000 5 .50% R-16 2008 2 ,055, 000 5 .50% R-17 2009 2, 165, 000 5 .50% R-18 2010 2,285, 000 5 . 50% R-19 2011 2,410,000 5 . 50% R-20 2012 2,545,000 5 .50% 6 . Execution of Bonds; Seal . The Bonds shall be signed by the Mayor and countersigned by the City Clerk, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the City had been manually impressed upon each of the Bonds . If any officer of the City whose manual or facsimile signature shall appear on the Bonds shall cease to be such officer before the authentication of such Bonds or before the delivery of such Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. 7 . Approval by Attorney General; Registration by Comptroller. The Bonds to be initially issued shall be delivered to the Attorney General of Texas for approval and shall be registered by the Comptroller of Public Accounts of the State of Texas . The manually executed registration certificate of the Comptroller of Public Accounts substantially in the form provided -7- in Section 17 of this Ordinance shall be attached or affixed to the Bonds to be initially issued. 8 . Authentication. Except for the Bonds to be initially issued which need not be authenticated by the Registrar, only such Bonds which bear thereon a certificate of authentication, substantially in the form provided in Section 17 of this Ordinance, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the Bonds so authenticated were delivered by the Registrar hereunder. The Registrar, when it authenticates a Bond, shall cause the Issuance Date to be stamped or imprinted on such Bond. Bonds delivered on transfer of or in exchange for other Bonds shall bear the same Issuance Date as the Bond or Bonds in lieu of or in exchange for which the new Bond or Bonds may be delivered. 9 . Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Bonds . The principal of and premium, if any, on the Bonds shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they respectively become due and payable, whether at maturity or by prior redemption, at the principal corporate trust office of the Registrar. The interest on each Bond shall be payable by check on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Bond Register. Any accrued interest payable at maturity on a Bond shall be paid upon presentation and surrender of such Bond at the principal corporate trust office of the Registrar. If the date for payment of the principal of and premium, if any, or interest on any Bond is not a Business Day, then the date for such payment shall be the next succeeding Business Day, with the same force and effect as if made on the original date that payment was due. 10 . Successor Registrars . The City covenants that at all times while any Bonds are outstanding it will provide a legally qualified bank, trust company, financial institution or other agency to act as Registrar for the Bonds . The City reserves the right to change the Registrar for the Bonds on not less than 60 days ' written notice to the Registrar, so long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Bonds . Promptly upon the appointment of any successor Registrar, the previous -8- Registrar shall deliver the Bond Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 11 . Special Record Date. If interest on any Bond is not paid on any Interest Payment Date and continues unpaid for 30 days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a "Special Record Date" when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be 15 days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than 5 days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. 12 . Ownership; Unclaimed Principal and Interest. The City, the Registrar and any other person may treat the person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of making and receiving payment of principal of and premium, if any, or interest on such Bond, and for all other purposes, whether or not such Bond is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the owner of any Bond in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Bond to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Bonds remaining unclaimed by the Owner after the expiration of 3 years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the applicable provisions of Texas law, including Title 6 of the Texas Property Code, as amended. 13 . Registration, Transfer, and Exchange. So long as any Bonds remain outstanding, the Registrar shall keep the Bond Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Bonds in accordance with the terms of this Ordinance. The Issuance Date of each Bond originally delivered to and paid for by TWDB shall be recorded in the Bond Register. If the Registrar does not maintain its principal offices in the State of Texas, the City agrees to keep a Bond Register at its offices which is identical to the Bond Register maintained by the Registrar and the Registrar will notify the City as to any changes in the Bond -9- Register within 1 business day. Each Bond shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Bond in proper form for transfer, the Registrar shall authenticate and deliver in exchange therefor, within 72 hours after such presentation, a new Bond or Bonds, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Bond or Bonds so presented. All Bonds shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Bond or Bonds of the same type, maturity and interest rate and in any authorized denomination, in an aggregate amount equal to the unpaid principal amount of the Bond or Bonds presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Bonds in accordance with the provisions of this Section 13 . Each , Bond delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such Bond is delivered. The City or the Registrar may require the Owner of any Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Bond. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. 14 . Mutilated, Lost, or Stolen Bonds . Upon the presentation and surrender to the Registrar of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, Issuance Date, interest rate, and principal amount, bearing a number not contemporaneously outstanding. If any Bond is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall execute and the Registrar shall authenticate and deliver a replacement Bond of like maturity, Issuance Date, interest rate and principal amount or maturity amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other expenses connected therewith, including the fees and expenses of the Registrar. The City or the Registrar may -10- require the Owner of a lost, apparently destroyed or wrongfully taken Bond, before any replacement Bond is issued, to: ( 1) furnish to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Bond; (2 ) furnish such security or indemnity as may be required by the Registrar and the City to save them harmless; ( 3) pay all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4 ) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Bond, a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the City and the Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or the Registrar in connection therewith. If any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Bond, authorize the Registrar to pay such Bond. Each replacement Bond delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. 15 . Cancellation of Bonds . All Bonds paid in accordance with this Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Bonds . 16 . Optional Redemption. The City reserves the right, at its option, to redeem Bonds maturing September 1, 2003, and thereafter prior to maturity, in whole or in part, in inverse order of maturity, on September 1, 2002, or on any date thereafter, at a price of par plus accrued interest on the -11- amounts called for redemption to the date fixed for redemption. Principal amounts may be redeemed only in integral multiples of $5 , 000 . If a Bond subject to redemption is in a denomination larger than $5, 000, a portion of such Bond may be redeemed, but only in integral multiples of $5, 000 . Upon surrender of any Bond for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Bond or Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. Notice of any redemption identifying the Bonds to be redeemed in whole or in part shall be given by the Registrar at least 30 days prior to the date fixed for redemption by sending written notice by first class mail to the Owner of each Bond to be redeemed in whole or in part at the address shown on the Register. Such notices shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all Bonds outstanding are to be redeemed, the numbers of the Bonds or portions thereof to be redeemed. Any notice given as provided in this Section 16 shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Bonds or portions thereof to be redeemed, plus accrued interest to the date fixed for redemption. When the Bonds have been called for redemption in whole or in part and due provision has been made to redeem the same as herein provided, the Bonds or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of receiving payment solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. 17 . Form. The form of the Bonds, including the form of the Registrar' s Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas which shall be attached or affixed to the Bonds initially issued shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: -12- FORM OF BOND (Face of Bond) United States of America State of Texas NUMBER DENOMINATION R- $ REGISTERED REGISTERED THE CITY OF BEAUMONT, TEXAS, WATERWORKS AND SEWER SYSTEM JUNIOR LIEN REVENUE BOND, SERIES 1992 INTEREST RATE : MATURITY DATE: ISSUANCE DATE: CUSIP: REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS The City of Beaumont, Texas (the "City" ) promises to pay to the Registered Owner identified above, or registered assigns, solely from the revenues described herein, on the date specified above, upon presentation and surrender of this Bond at the principal corporate trust office of Ameritrust Texas, N.A. , Houston, Texas (the "Registrar" ) , the principal amount identified above, payable in any coin or currency of the United States of America which on the date of payment of such principal is legal tender for the payment of debts due the United States of America, and to pay interest thereon at the rate shown above, calculated on the basis of a 360-day year of twelve 30 day months, from the later of the Issuance Date identified above, or the most recent interest payment date to which interest has been paid or duly provided for. The date of this Bond is April 1, 1992 , but interest shall accrue on the principal amount hereof from the Issuance Date. Interest on this bond is payable by check on September 1 and March 1, beginning on September 1, 1992, mailed to the registered owner of record as shown on the books of registration kept by the Registrar as of the 15th calendar day of the month next preceding each interest payment date. Any accrued interest due at maturity shall be paid upon presentation and surrender of this Bond at the principal corporate trust office of the Registrar. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH AT THIS PLACE. IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signature of the Mayor and countersigned with the manual or facsimile signature of the City Clerk, and the official seal of the City has been duly impressed, or placed in -13- facsimile, on this Bond. (AUTHENTICATION CERTIFICATE) THE CITY OF BEAUMONT (SEAL) Mayor City Clerk (Back Panel of Bond) THIS BOND is one of a duly authorized issue of Bonds, aggregating $20,000,000 (the "Bonds" ) , issued for the purpose of providing money for acquisitions, extensions, construction, improvement, or repair of its waterworks and sewer system (the "System" ) , pursuant to an ordinance adopted by the City Council on March 3, 1992 (the "Ordinance" ) , and in accordance with the authority of Article 1111 et seq. , Vernon' s Annotated Texas Civil Statutes, as amended, and all other applicable law, including Chapter 252 of the Texas Local Government Code, as amended. , THIS BOND AND ALL OF THE BONDS OF THIS SERIES are special obligations of the City that, together with (i) the City' s outstanding Waterworks and Sewer System Revenue Refunding Bonds, Series 1981 and ( ii) to the extent of $10,000 per annum, the City' s outstanding Combination Tax and Revenue Certificates of Obligation, Series 1990, are equally and ratably payable from and secured by a lien on the "Net Revenues" collected and received by the City from the operation and ownership of those properties, facilities, improvements, equipment, interests, rights and powers constituting the waterworks and sewer system of the City which are defined in the Ordinance as the "System" , which Net Revenues are required to be set aside for and pledged to the payment of this series of Bonds and all additional bonds issued on a parity therewith, in the interest and sinking fund and the reserve fund required to be maintained for the payment of all such bonds, all as more fully described and provided for in and subject to the restrictions and limitations imposed by the Ordinance. THE LIEN ON NET REVENUES SECURING THE BONDS OF THIS SERIES AND ALL BONDS ISSUED ON A PARITY THEREWITH SHALL BE IN ALL RESPECTS JUNIOR AND SUBORDINATE TO THE PRIOR AND SUPERIOR LIEN ON NET REVENUES THAT SHALL SECURE THE PAYMENT OF PRIOR LIEN WATERWORKS AND SEWER SYSTEM REVENUE BONDS WHICH THE CITY ISSUED IN 1989 AND WHICH THE CITY HAS RESERVED THE RIGHT TO ISSUE FROM TIME TO TIME IN THE FUTURE SUBJECT TO THE RESTRICTIONS CONTAINED IN THE ORDINANCES AUTHORIZING ISSUANCE OF SUCH PRIOR LIEN BONDS. This Bond and the series of which it is a part, together with the interest thereon, are payable solely from such Net Revenues and do not constitute an indebtedness or general obligation of the City. -14- THE CITY HAS RESERVED THE RIGHT TO ISSUE prior lien bonds, additional junior lien bonds, and subordinate lien bonds and obligations, subject to the restrictions and limitations contained in the Ordinance, which may be secured by a lien and pledge prior and superior to, on a parity with, or subordinate and inferior to, the lien on and pledge of the aforesaid Net Revenues securing this Bond and the series of which it is a part. THE OWNER HEREOF shall never have the right to demand payment of this Bond out of any funds raised or to be raised by taxation. THE CITY RESERVES THE RIGHT, at its option, to redeem Bonds maturing September 1, 2003 and thereafter prior to their scheduled maturities, in whole or from time to time in part, in integral multiples of $5, 000, but in inverse order of maturity, on September 1, 2002 , or on any date thereafter, at a price equal to par plus accrued interest on the principal amounts called for redemption to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming Bonds . NOTICE OF ANY REDEMPTION shall be given at least 30 -days prior to the date fixed for redemption by first class mail, addressed to the registered owners of each Bond to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Bonds or portions thereof have been called for redemption, and due provision has been made to redeem the same, the principal amounts so redeemed shall be payable solely from the funds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. THIS BOND IS TRANSFERABLE only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. THIS BOND IS EXCHANGEABLE at the principal corporate trust office of the Registrar for bonds in the principal amount of $5, 000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. THIS BOND shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Bond either (i) is registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) is authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. -15- THE REGISTERED OWNER of this Bond, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified Registrar for the Bonds and will cause notice of any change of Registrar to be mailed to each registered owner. IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to exist and to be done precedent to or in the issuance and delivery of this Bond have been performed, exist and have been done in accordance with law; that the Bonds of this series do not exceed any statutory limitation; and that provision has been made for the payment of principal and interest on this bond and all of the Bonds of this series by the aforesaid lien on and pledge of the Net Revenues of the System. Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER' S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Bond and the proceedings for the issuance hereof have been examined by him as required by law, that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas and that it is a valid and binding special obligation of the City of Beaumont, Texas, payable from the revenues pledged to its payment by and in the proceedings authorizing the same, and I do further certify that this Bond has this day been registered by me. WITNESS MY SIGNATURE AND SEAL this , 1992 . xxxxxxxxxx Comptroller of Public Accounts (SEAL) of the State of Texas Form of Registrar' s Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been delivered pursuant to the Ordinance described in the text of this Bond, in exchange for or in replacement of a Bond, Bonds or a portion of a Bond or Bonds of a Series which was originally approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas . -16- Ameritrust Texas, N.A. , Houston, Texas By: Authorized Signature Date of Authentication: Form of Assignment ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto -------------------------------- (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said Bond on the books kept for registration thereof, with full power of substitution in the premises . DATED Signature Guaranteed: Registered Owner NOTICE: The signature above must correspond to the name of the registered owner as shown NOTICE : Signature must be on the face of this Bond in guaranteed by a member firm every particular, without of the New York Stock any alteration, enlargement Exchange or a commercial or change whatsoever. bank or trust company. 18 . Legal Opinion; Cusip. The approving opinion of Orgain, Bell & Tucker, Beaumont, Texas, and CUSIP Numbers may be printed on the Bonds, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Bonds . 19 . (a) Pledge and Source of Payment. The City hereby covenants and agrees that all Gross Revenues of the System shall, as collected and received by the City, be deposited and paid into the special funds hereinbelow described, and shall be applied in the manner hereinafter set forth, in order to provide for ( i) the payment of all Maintenance and Operation Expenses, ( ii) the -17- payment of principal, interest and any redemption premiums (if any) on the Prior Lien Bonds and all expenses of paying same ( including premiums for any Qualified Surety Bond and any amounts to be reimbursed under a Financial Guaranty Agreement in respect thereof) , and ( iii) the payment of principal, interest and any redemption premiums (if any) on the Junior Lien Bonds and all expenses of paying same ( including premiums for any Qualified Surety Bond and any amounts to be reimbursed under a Financial Guaranty Agreement in respect thereof) . The Junior Lien Bonds shall constitute special obligations of the City that shall be payable solely from and, subject to the prior and superior lien of the Prior Lien Bonds, shall be equally and ratably secured by a lien on the Net Revenues, as collected and received by the City from the operation and ownership of the System, which Net Revenues shall, in the manner hereinafter provided, be set aside for and pledged to the payment of the Junior Lien Bonds in the Junior Lien Bond Interest and Sinking Fund and the Junior Lien Bond Reserve Fund as hereinafter provided, and except as otherwise expressly provided herein, the Junior Lien Bonds shall be in all respects on a parity with and of equal dignity with one another. Notwithstanding any provision herein to the contrary, it is expressly stipulated and provided that the Certificates of Obligation which were issued as Junior Lien Bonds pursuant to the Outstanding Certificate of Obligation Ordinance are secured by a pledge of Net Revenues of the System only to the extent of $10,000 per annum, and accordingly for all purposes of this Ordinance ( including without limitation deposits into the Junior Lien Bond Interest and Sinking Fund and the Junior Lien Bond Reserve Fund and calculations of Annual and Average Annual Principal and Interest Requirements) the Certificates of Obligations shall be considered to be Junior Lien Bonds only to the extent of such limited annual pledge of Net Revenues . The holders of the Junior Lien Bonds shall never have the right to demand payment of the principal of or premium, if any, or interest on the Junior Lien Bonds out of any funds raised or to be raised by taxation. (b) Rates and Charges . So long as any Junior Lien Bonds remain outstanding, there shall be fixed, charged and collected by the City rates and charges for the use and services of the System, which shall be fully sufficient at all times : (i) to pay all Maintenance and Operation Expenses; and ( ii) to produce Net Revenues in each Fiscal Year at least equal to 125% of the Average Annual Principal and Interest Requirements on all Prior Lien Bonds and Junior Lien Bonds, but in no event less than the amount required to establish and maintain the Prior Lien Bond Interest and Sinking Fund, the Prior Lien Bond Reserve Fund, the Junior Lien Bond Interest and Sinking Fund, and the -18- Junior Lien Bond Reserve Fund as hereinafter provided, and to pay all outstanding obligations payable from the Net Revenues of the System, other than Prior Lien Bonds and Junior Lien Bonds, as and when the same become due, and to pay all premiums for any Qualified Surety Bonds and any amounts to be reimbursed under any Financial Guaranty Agreement in respect thereof. The City covenants that it will not grant or permit any free service from the System except for public buildings and institutions operated by the City. (c) Special Funds . The following special funds shall be maintained and accounted for as hereinafter provided so long as any of the Junior Lien Bonds remain outstanding: ( i) the Revenue Fund; ( ii) the Prior Lien Bond Interest and Sinking Fund; ( iii ) the Prior Lien Bond Reserve Fund; ( iv) the Junior Lien Bond Interest and Sinking Fund; and (v) the Junior Lien Bond Reserve Fund. Pursuant to this Ordinance, the Outstanding Prior Lien Bond Ordinance, and the Outstanding Junior Lien Bond Ordinance, the Revenue Fund shall be maintained as a separate account on the books of the City. In accordance with the applicable provisions of this Ordinance, the Outstanding Prior Lien Bond Ordinance and the Outstanding Junior Lien Bond Ordinance, the Prior Lien Bond Interest and Sinking Fund, the Prior Lien Bond Reserve Fund, the Junior Lien Bond Interest and Sinking Fund and the Junior Lien Bond Reserve Fund shall be maintained at an official depository bank of the City, separate and apart from all other funds and accounts of the City. The Prior Lien Bond Interest and Sinking Fund and the Prior Lien Bond Reserve Fund shall constitute trust funds which shall be held in trust for the benefit of the holders of the Prior Lien Bond and the proceeds of which (except for interest income, which shall be transferred to the Revenue Fund) shall be pledged to the payment of the Prior Lien Bonds . The Junior Lien Bond Interest and Sinking Fund and the Junior Lien Bond Reserve Fund shall constitute trust funds which shall be held in trust for the benefit of the holders of the Junior Lien Bonds and the proceeds of which (except for interest income, which shall be transferred to the Revenue Fund) shall be and are hereby pledged to the payment of the Junior Lien Bonds . Notwithstanding the foregoing, it is expressly stipulated that a separate subaccount shall be established and maintained in the -19- Prior Lien Bond Reserve Fund for each affected series of Prior Lien Bonds pursuant to Subsection (g) below, and each subaccount shall provide a separate source of payment solely for the respective series of Prior Lien Bonds as to which the subaccount has been established and maintained. All of the Funds named above shall be used solely as provided herein so long as any Junior Lien Bonds remain outstanding. (d) Flow of Funds . All Gross Revenues of the System shall be deposited as collected into the Revenue Fund. Moneys from time to time on deposit to the credit of the Revenue Fund shall be applied as follows in the following order of priority: ( i) First, to pay Maintenance and Operation Expenses and to provide by encumbrance for the payment of all obligations incurred by the City for Maintenance and Operation Expenses which may include an operating reserve equal to one month' s estimated Maintenance and Operation Expenses . ( ii) Second, to make all deposits into the Prior Lien Bond Interest and Sinking Fund required by this Ordinance and any ordinance authorizing , the issuance of Prior Lien Bonds . ( iii) Third, to reimburse Insurers for any amounts advanced from time to time under any Qualified Surety Bonds and any accompanying Financial Guaranty Agreements in respect of Prior Lien Bonds . ( iv) Fourth, to make all deposits into the Prior Lien Bond Reserve Fund required by this Ordinance and any ordinance authorizing the issuance of Prior Lien Bonds as provided in Subsection (g) hereof. (v) Fifth, to pay Insurers interest on amounts advanced from time to time under any Qualified Surety Bonds and any accompanying Financial Guaranty Agreements in respect of Prior Lien Bonds . (vi) Sixth, to make all deposits into the Junior Lien Bond Interest and Sinking Fund required by this Ordinance and any ordinance authorizing the issuance of Junior Lien Bonds . (vii) Seventh, to reimburse Insurers for any amounts advanced from time to time under any Qualified Surety Bonds and any accompanying Financial Guaranty Agreements in respect of Junior Lien Bonds . -20- (viii) Eighth, to make all deposits into the Junior Lien Bond Reserve Fund required by this Ordinance and any ordinance authorizing the issuance of Junior Lien Bonds as provided in Subsection ( i) hereof. ( ix) Ninth, to pay Insurers interest on amounts advanced from time to time under any Qualified Surety Bonds and any accompanying Financial Guaranty Agreements in respect of Prior Lien Bonds . (x) Tenth, to make all deposits required by any ordinances authorizing the issuance of obligations subordinate to the Junior Lien Bonds . (xi) Eleventh, for any lawful purpose. Whenever the total amounts on deposit to the credit of the Prior Lien Bond Interest and Sinking Fund and the Prior Lien Bond Reserve Fund shall be equivalent to the sum of the aggregate principal amount of all outstanding Prior Lien Bonds plus the aggregate amount of all interest accrued and to accrue thereon, no further payments need be made into the Prior Lien Bond Interest and Sinking Fund or the Prior Lien Bond Reserve Fund, and such Prior Lien Bonds shall not be regarded as being outstanding except for the purpose of being paid with the moneys on deposit in such Funds . Whenever the total amounts on deposit to the credit of the Junior Lien Bond Interest and Sinking Fund and the Junior Lien Bond Reserve Fund shall be equivalent to the sum of the aggregate principal amount of all outstanding Junior Lien Bonds plus the aggregate amount of all interest accrued and to accrue thereon, no further payments need be made into the Junior Lien Bond Interest and Sinking Fund or the Junior Lien Bond Reserve Fund, and such Junior Lien Bonds shall not be regarded as being outstanding except for the purpose of being paid with the moneys on deposit in such funds . (e) Construction Fund. There is hereby created and established a special fund of the City, to be known as "The City of Beaumont, Texas, Waterworks and Sewer System Junior Lien Revenue Bonds, Series 1992 Construction Fund" , which shall be established at an official depository of the City and kept separate and apart from the other funds of the City. The proceeds of the Bonds, as received, shall be deposited into the Construction Fund. Money on deposit in the Construction Fund shall be used only for the purposes set forth in Sections 3 and 25 of this Ordinance. Money on deposit in the Construction Fund may, at the option of the City, be invested as permitted by Texas law; provided that all such deposits and investments shall be made in such manner that the money required to be expended from the Construction Fund will be available at the proper time or times . So long as any Bonds remain outstanding, all uninvested -21- moneys on deposit in, or credited to, the Construction Fund shall be secured by the pledge of security, as provided by law for cities in the State of Texas . All interest and income derived from such deposits and investments shall remain in the Construction Fund, and shall be used for the purposes set forth in Sections 3 and 25 of this Ordinance. ( f) Prior Lien Bond Interest and Sinking Fund. After making all required payments and provision for payment of Maintenance and Operation Expenses, there shall be transferred in approximately equal monthly deposits into the Prior Lien Bond Interest and Sinking Fund from the Revenue Fund such amounts on such dates as may be provided in the ordinances authorizing the issuance of the Prior Lien Bonds in order to provide for the full and timely payment of all principal of and premium, if any, and interest on all such Prior Lien Bonds and all expenses of paying same. (g) Prior Lien Bond Reserve Fund. After making the transfers into the Prior Lien Bond Interest and Sinking Fund required by this Ordinance and any ordinance authorizing the issuance of Prior Lien Bonds pursuant to Subsection ( f) above, the City shall deposit and maintain, or cause to be deposited and maintained, either in the form of cash, a Qualified Surety Bond, or any combination thereof, into a separate subaccount of the Prior Lien Bond Reserve Fund established for each respective series of Prior Lien Bonds, either ( i) an amount equal to the Reserve Fund Requirement for that respective series or ( ii) a Qualified Surety Bond issued by an Insurer in an amount which, when added to the sums on deposit pursuant to clause ( i) above, equals the Reserve Fund Requirement for that respective series . After the Reserve Fund Requirement has been satisfied in the Prior Lien Bond Reserve Fund as provided in the immediately preceding sentence for a series of Prior Lien Bonds, and so long thereafter as such requirement remains satisfied, no further deposits into the subaccount of the Prior Lien Bond Reserve Fund for that series shall be required; but if and whenever the Reserve Fund Requirement is not satisfied for any reason with respect to that series , then the City shall deposit or cause to be deposited into the subaccount of the Prior Lien Bond Reserve Fund for that series either ( i) amounts on a monthly basis at least equal to 1/60th of the Reserve Fund Requirement for that series until such requirement is satisfied, or ( ii) a Qualified Surety Bond issued by an Insurer in an amount which, when added to the sums on deposit in the subaccount of the Prior Lien Bond Reserve Fund for that series, equals the Reserve Fund Requirement for that series . Whenever the subaccount of the Prior Lien Bond Reserve Fund for a series of Prior Lien Bonds contains more than the Reserve Fund Requirement with respect to that series, the City may transfer any excess cash amounts to the Prior Interest and Sinking Fund for payment of that series of Prior Lien Bonds and all other series of Prior Lien Bonds on a prorata basis . The -22- subaccount of the Prior Lien Bond Reserve Fund for a series of Prior Lien Bonds shall be used to pay the principal of and premium, if any, and interest on that series at any time when there is not sufficient money available in the Prior Lien Bond Interest and Sinking Fund for such purpose, and it may be used finally to pay and retire the last Prior Lien Bonds of that series to mature or be redeemed; provided that all cash and other amounts on deposit in the Prior Lien Bond Reserve Fund for that series shall first be transferred to the Prior Lien Bond Interest and Sinking Fund for the purpose of making such payments prior to making any demand for payment under any Qualified Surety Bond. (h) Junior Lien Bond Interest and Sinking Fund. On or before the last Business Day of each month so long as any Junior Lien Bonds remain outstanding and after making all payments required pursuant to clauses first through fifth (inclusive) of Subsection (d) above, there shall be transferred into the Junior Lien Bond Interest and Sinking Fund from the Revenue Fund the following amounts : ( i) Such amounts, in approximately equal monthly installments, as will be sufficient to pay the interest scheduled to become due on the Junior Lien Bonds on the next interest payment date; and ( ii) Such amounts, in approximately equal monthly installments, as will be sufficient to pay the next maturing principal of the Junior Lien Bonds, including the principal amounts of and any redemption premiums on any Junior Lien Bonds payable as a result of the exercise or operation of any redemption provision contained in this Ordinance or in any ordinance authorizing the issuance of Junior Lien Bonds . Moneys deposited to the credit of the Junior Lien Bond Interest and Sinking Fund (except for interest income, which shall be transferred to the Revenue Fund) shall be used solely for the purpose of paying principal (either at maturity or prior redemption or to purchase Junior Lien Bonds in the open market to be credited against mandatory redemption requirements) , interest and redemption premiums on the Junior Lien Bonds, plus all bank charges and other costs and expenses relating to such payment, on a pro rata basis among all series of Junior Lien Bonds . On or before each principal and/or interest payment date for the Junior Lien Bonds, the City shall transfer from the Junior Lien Bond Interest and Sinking Fund to the paying agents for the Junior Lien Bonds, an amount equal to the principal, interest and redemption premiums payable on the Junior Lien Bonds on such date, together with an amount equal to all bank charges and other costs and expenses relating to such payment. The paying agents for the Junior Lien Bonds shall totally destroy all paid Junior -23- Lien Bonds and coupons ( if any) and shall provide the City with an appropriate certificate of destruction. ( i) Junior Lien Bond Reserve Fund. On or before the last Business Day of each month so long as any Junior Lien Bonds remain outstanding and after making all payments required pursuant to clauses first through seventh ( inclusive of Subsection (d) above, the City shall deposit and maintain, or cause to be deposited and maintained, in the Junior Lien Bond Reserve Fund either ( i) an amount equal to at least one-sixtieth ( 1/60th) of the Junior Lien Bond Reserve Fund Requirement unless or until there has been accumulated in the Junior Lien Bond Reserve Fund money and property in the aggregate amount at least equal to the Junior Lien Bond Reserve Fund Requirement or ( ii) in the case of Junior Lien Bonds other than the outstanding Series 1981 Junior Lien Bonds, a Qualified Surety Bond issued by an Issuer in an amount which, when added to the sums on deposit in the Junior Lien Bond Reserve Fund, equals to the Junior Lien Bond Reserve Fund Requirement with respect to Junior Lien Bonds of the affected series . After such amount has accumulated in the Junior Lien Bond Reserve Fund to satisfy the Junior Lien Bond Reserve Fund Requirement and so long thereafter as such amount remains in the Junior Lien Bond Reserve Fund, no further deposits shall be required to be made into the Junior Lien Bond Reserve Fund and any excess amounts in the Fund may be transferred to the Revenue Fund. But if and whenever the balance in the Junior Lien Bond Reserve Fund is reduced below the Junior Lien Bond Reserve Fund Requirement, then the City shall deposit or cause to be deposited into the Junior Lien Bond Reserve Fund either ( i) amounts on a monthly basis at least equal to one-sixtieth ( 1/60th) of the Junior Lien Bond Reserve Fund Requirement until the Junior Lien Bond Reserve Fund has been restored to such required amount or ( ii) in the case of Junior Lien Bonds other than the outstanding Series 1981 Junior Lien Bonds, a Qualified Surety Bond issued by an Insurer in an amount which, when added to sums on deposit in the Junior Lien Bond Reserve Fund, equals the Junior Lien Bond Reserve Fund Requirement with respect to Junior Lien Bonds of the affected series . The Junior Lien Bond Reserve Fund shall be used to pay the principal of and premium, if any, and interest on the Junior Lien Bonds at any time when there is not sufficient money available in the Junior Lien Bond Interest and Bond Fund for such purpose and it may be used finally to pay and retire the last Junior Lien Bonds to mature or be redeemed; provided that all cash and other amounts on deposit in the Junior Lien Bond Reserve Fund shall first be transferred to the Junior Lien Bond Interest and Sinking Fund for the purpose of making payments prior to making any demand for payment under any Qualified Surety Bond. ( j ) Deficiencies in Funds . If in any month there shall not be deposited into any Fund the full amounts required herein, amounts equivalent to such deficiency shall be set apart and paid into such Fund or Funds on a pro rata basis first for -24- P each series of Prior Lien Bonds and second for each series of Junior Lien Bonds from the first available and unallocated moneys in the Revenue Fund, and such payment shall be in addition to the amounts otherwise required to be paid into such Funds during any succeeding month or months . To the extent necessary, the rates and charges for the System shall be increased to make up for any such deficiencies . (k) Investment of Funds; Transfer of Investment Income. Money in each Fund maintained pursuant to this Section of this Ordinance may, at the option of the City, be invested in time deposits or certificates of deposit secured in the manner required by law for public funds, or be invested in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America or any of its agencies or instrumentalities, or in any other obligations permitted by law but only if such obligations are rated "AA" or better by Moody' s Investors Services, Inc. or Standard & Poor' s Corporation; provided that all such deposits and investments shall be made in such manner that the money required to be expended from any such Fund shall be available at the proper time or times, and provided further that in no event shall such deposits or investments of moneys in the Prior , Lien Bond Reserve Fund or the Junior Lien Bond Reserve Fund mature later than the final maturity date of the then outstanding Prior Lien Bonds or Junior Lien Bonds, whichever may be the case. All such investments shall be valued in terms of current market value no less frequently than the last Business Day of the Fiscal Year, except that any direct obligations of the United States of America-State and Local Government Series shall be continuously valued at their par value or principal face amount. Any obligation in which money is so invested shall be kept and held in the official depository bank of the City at which the Fund is maintained from which such investment was made. All such investments shall be promptly sold when necessary to prevent any default in connection with the Prior Lien Bonds or the Junior Lien Bonds . All interest and income derived from such deposits and investments shall be transferred or credited as received to the Revenue Fund, and shall constitute the Gross Revenues of the System. ( 1) Security for Uninvested Funds . So long as any Junior Lien Bonds remain outstanding, all uninvested moneys on deposit in, or credited to, Funds maintained pursuant to this Ordinance shall be secured by a pledge of security, as provided by law in the State of Texas, in a principal amount not less than the amount of such uninvested funds . 20 . Additional Bonds . (a) Additional Prior Lien Bonds and Additional Junior Lien Bonds . The City reserves the right to issue, for any lawful -25- purpose, including the refunding of any previously issued Prior Lien Bonds or Junior Lien Bonds or any other bonds or obligations of the City issued in connection with the System, one or more series of ( 1) Additional Prior Lien Bonds payable from, and secured by a first lien on and pledge of, the Net Revenues of the System prior and superior to the lien and pledge securing the Junior Lien Bonds, and (2 ) Additional Junior Lien Bonds on a parity with the Junior Lien Bonds then outstanding; provided, however, that no Additional Prior Lien Bonds or Additional Junior Lien Bonds may be issued unless : ( i) The Additional Prior Lien Bonds or the Additional Junior Lien Bonds shall mature only on September 1 and interest thereon shall be payable only on March 1 and September 1; ( ii) The Prior Lien Bond Interest and Sinking Fund and the Prior Lien Bond Reserve Fund and, for the issuance of Additional Junior Lien Bonds, the Junior Lien Bond Interest and Sinking Fund and the Junior Lien Bond Reserve Fund, each contain the amount of money or property then required to be on deposit therein or the fraction thereof then required to have been accumulated therein; (iii) For either the preceding Fiscal Year or any consecutive 12-month period out of the 18-month period immediately preceding the month in which the ordinance authorizing such Prior Lien Bonds or Junior Lien Bonds is adopted (the "Base Period" ) , either: ( 1) Net Earnings (as defined below) are certified by the Finance Officer of the City to have been equal to at least (a) 140% of the Average Annual Principal and Interest Requirements on all Prior Lien Bonds and (b) 125% of the Average Annual Principal and Interest Requirements on all Prior Lien Bonds and Junior Lien Bonds, in each case after giving effect to the issuance of the Additional Prior Lien Bonds or Additional Junior Lien Bonds to be issued; or (2) Net Earnings, adjusted to give effect to any rate increase placed into effect at least 60 days prior to the adoption of the ordinance authorizing the Additional Prior Lien Bonds or the Additional Junior Lien Bonds, as the case may be, as if such rate increase had been placed into effect prior to the -26- P commencement of the Base Period, would have been equal to at least the amounts required in paragraph ( 1) above, as certified by an independent firm of consulting engineers or independent firm of certified public accountants; provided, however, that the requirements of this paragraph ( iii) shall not apply to the issuance of any series of refunding bonds that will not have the result of increasing the Average Annual Principal and Interest Requirements on either the Prior Lien Bonds or the Junior Lien Bonds; and ( iv) Provision is made in the ordinance authorizing the Additional Prior Lien Bonds or the Additional Junior Lien Bonds then proposed to be issued for additional payments into the Prior Lien Bond Interest and Sinking Fund or the Junior Lien Bond Interest and Sinking Fund, whichever may be the case, sufficient to provide for the payment of ( i) the increased principal of and interest on the Prior Lien Bonds or Junior Lien Bonds resulting from issuance thereof and (ii) the increased payments into the Prior Lien Bond Reserve Fund or the Junior Lien Bond Reserve Fund, as the case may be, for such Bonds so that the affected Fund will in not later than 5 years from the date of issuance of such Bonds contain a balance of not less than the Reserve Fund Requirement for such Additional Prior Lien Bonds or Additional Junior Lien Bonds, whichever may be the case. For purposes of this Subsection, the term "Net Earnings" shall mean all of the Net Revenues, except that in calculating Net Revenues there shall not be deducted as Maintenance and Operation Expenses any charge, disbursement or expenditure for repairs, extensions or otherwise which, under standard accounting practice, should be charged to capital expenditures . (b) Subordinate Lien Obligations . The City reserves the right to issue, for any lawful purpose, bonds, notes or other obligations secured in whole or in part by liens on and pledges of the Net Revenues that are junior and subordinate to the lien on and pledge of Net Revenues securing payment of the Prior Lien Bonds and the Junior Lien Bonds . Such subordinate lien obligations may be further secured by any other source of payment lawfully available for such purposes . (c) Special Project Bonds . The City reserves the right to issue revenue bonds secured by liens on and pledges of revenues and proceeds derived from Special Projects . _27_ r 21 . Covenants and Provisions Relating to all Junior Lien Bonds . (a) Punctual Payment of Prior Lien Bonds and Junior Lien Bonds . The City will punctually pay or cause to be paid the principal of and premium, if any, and interest on all Prior Lien Bonds and Junior Lien Bonds according to the terms thereof and will faithfully do and perform, and at all times fully observe, any and all covenants, undertakings, stipulations and provisions contained in this Ordinance and in any ordinance authorizing the issuance of such Bonds . (b) Power to Own and Operate System; Rate Making Power. The City hereby covenants and represents that it has all necessary power and authority to own and operate the System as herein described and provided and that it possesses, and shall exercise, all necessary power and authority to establish, fix, increase, impose and collect rates and charges for the use and services of the System in the amounts required to comply with the covenants and provisions contained herein. (c) Maintenance of System. So long as any Junior Lien Bonds remain outstanding, the City covenants that it will at all times maintain the System, or within the limits of its authority cause the same to be maintained, in good condition and working order and will operate the same, or cause the same to be operated, in an efficient and economical manner at a reasonable cost and in accordance with sound business principles . In operating and maintaining the System, the City will comply with all contractual provisions and agreements entered into by it and with all valid rules, regulations, directions or order of any governmental, administrative or judicial body promulgating same, noncompliance with which would materially and adversely affect the operation of the System. (d) Sale or Encumbrance of System. So long as any Junior Lien Bonds remain outstanding, the City will not sell, dispose of or, except as permitted in this Ordinance, further encumber the System; provided, however, that this provision shall not prevent the City from disposing of any portion of the System which has been declared surplus or is no longer needed for the proper operation of the System. Any agreement pursuant to which the City contracts with a person, corporation, municipal corporation or political subdivision to operate the System or to lease and/or operate all or part of the System shall not be considered as an encumbrance of the System. (e) Insurance. The City further covenants and agrees that it will keep the System insured with insurers of good standing against risks, accidents or casualties against which and to the extent insurance is customarily carried by political subdivisions of the State of Texas operating similar properties, _28_ r to the extent that such insurance is available. All net proceeds of such insurance shall be applied to repair or replace the insured property that is damaged or destroyed or shall be used to redeem outstanding Prior Lien Bonds, Junior Lien Bonds, or other obligations payable from revenues of the System. The cost of all such insurance, together with any additional insurance, shall be a part of the Maintenance and Operation Expenses, and such insurance shall be carried for the benefit of the City and holders of the Prior Lien Bonds and the Junior Lien Bonds, as their interests may appear. ( f) Accounts, Records and Audits . So long as any Junior Lien Bonds remain outstanding, the City covenants and agrees that it will maintain a proper and complete system of records and accounts pertaining to the operation of the System in which full, true and proper entries will be made of all dealings, transactions, business and affairs which in any way affect or pertain to the System or the Gross Revenues or the Net Revenues thereof. The City shall after the close of each of its Fiscal Years cause an audit report of such records and accounts to be prepared by an independent certified public accountant or independent firm of certified public accountants . Each year promptly after such audit report is prepared, the City shall furnish a copy thereof without cost to the Municipal Advisory Council of Texas, the major municipal rating agencies and any holders of Junior Lien Bonds who shall request same. All expenses incurred in preparing such audits shall be Maintenance and Operation Expenses . (g) Competition. To the extent it legally may, the City will not grant any franchise or allow for the acquisition, construction or operation of any competing facilities which might be used as a substitute for the System and will prohibit the operation of any such competing facilities . (h) Pledge and Encumbrance of Net Revenues . The City covenants and represents that it has the lawful power to pledge the Net Revenues to the payment of the Junior Lien Bonds and has lawfully exercised such power under the Constitution and laws of the State of Texas . The City further covenants and represents that, other than to the payment of the Prior Lien Bonds and the Junior Lien Bonds, the Net Revenues are not and will not be pledged to the payment of any debt or obligation of the City, or in any other manner encumbered, unless such pledge or encumbrance is junior and subordinate to the lien and pledge securing payment of the Prior Lien Bonds and the Junior Lien Bonds . ( i) Remedies . This Ordinance shall constitute a contract between the City, the holders of the Junior Lien Bonds from time to time outstanding, and the Insurers ( if applicable) , and this Ordinance shall be and remain irrepealable until the Junior Lien Bonds and the interest thereon and all amounts owing -29- to the Insurers under any Financial Guaranty Agreements shall be fully paid or discharged or provision therefor shall have been made as provided herein. In the event of a default in the payment of the principal of or premium ( if any) or interest on any of the Junior Lien Bonds or a default in the performance of any duty or covenant provided by law or in this Ordinance or a default in respect of any Financial Guaranty Agreement in effect from time to time, the holder or holders of any of the Junior Lien Bonds or any Insurer, as appropriate, may pursue all legal remedies afforded by the Constitution and laws of the State of Texas to compel the City to remedy such default and to prevent further default or defaults . Without in any way limiting the generality of the foregoing, it is expressly provided that any holder of any of the Junior Lien Bonds or any Insurer, as appropriate, may at law or in equity, by suit, action, mandamus, or other proceedings, enforce and compel performance of all duties required to be performed by the City under this Ordinance, including the making and collection of reasonable and sufficient rates and charges for the use and services of the System, the deposit of the Gross Revenues thereof into the special funds as herein provided, and the application of such Gross Revenues and Net Revenues in the manner required in this Ordinance. ( j ) Defeasance. The City may defease the provisions of this Ordinance and discharge its obligation to the holders of any or all of the Junior Lien Bonds to pay principal, interest and redemption premium ( if any) thereon in any manner permitted by law, including, without limitation, by depositing with any paying agent for such Junior Lien Bonds or with the State Treasurer of the State of Texas either: (i) cash in an amount equal to the principal amount and redemption premium, if any, of such Junior Lien Bonds plus interest thereon to the date of maturity or redemption, or (ii) pursuant to an escrow or trust agreement, direct obligations of, or obligations the principal and interest of which are guaranteed by, the United States of America, in principal amounts and maturities and bearing interest at rates sufficient to provide for the timely payment of the principal amount and redemption premium, if any, of such Junior Lien Bonds plus interest thereon to the date of maturity or redemption; provided, however, that if any of such Junior Lien Bonds are to be redeemed prior to their respective dates of maturity, provision shall have been made for giving notice of redemption as provided in the ordinance authorizing such Junior Lien Bonds . Upon such deposit, such Junior Lien Bonds and coupons appertaining thereto shall no longer be regarded to be outstanding or unpaid, and the lien on and pledge of Net Revenues securing such Junior Lien Bonds shall thereupon cease and terminate. (k) Unavailability of Authorized Publication. If, because of the temporary or permanent suspension of any newspaper, journal or other publication, or, for any reason, -30- T publication of notice cannot be made meeting any requirements herein established, any notice required to be published by the provisions of this Ordinance shall be given in such other manner and at such time or times as in the judgment of the City shall most effectively approximate such required publication and the giving of such notice in such manner shall for all purposes of this Ordinance be deemed to be in compliance with the requirements for publication thereof. ( 1) Obligations Owing to Insurers . The City stipulates and agrees that it shall make full and timely payment of all amounts owing to any Insurer under any Financial Guaranty Agreements and there shall be no termination of this Ordinance or redemption, refunding or defeasance of the Junior Lien Bonds unless and until all of such amounts owing under the Financial Guaranty Agreement in respect of those Bonds shall have been paid in full . (m) Paring Agent May Own Bonds . The paying agent for the Junior Lien Bonds, in its individual or any other capacity, may become a holder or pledgee of the Junior Lien Bonds with the same rights it would have if it were not the paying agent. 22 . Further Proceedings . After the Bonds to be initially delivered to the TWDB shall have been executed, it shall be the duty of the Mayor and other appropriate officials and agents of the City to deliver the Bonds to be initially issued and all pertinent records and proceedings to the Attorney General of the State of Texas, for examination and approval . After the Bonds to be initially delivered to the TWDB shall have been approved by the Attorney General, they shall be delivered to the Comptroller of Public Accounts of the State of Texas for registration. Upon registration of the Bonds to be initially delivered to the TWDB, the Comptroller of Public Accounts (or the Comptroller' s bond clerk or an assistant bond clerk lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller' s Registration Certificate prescribed herein to be attached or affixed to the Bonds to be initially delivered to the TWDB, and the seal of said Comptroller shall be impressed or placed in facsimile, thereon. 23 . Sale. The sale of the Bonds to TWDB on an installment basis at a price of par is hereby authorized, approved, ratified and confirmed, subject to the unqualified approving opinion as to the legality of the Bonds of the Attorney General of the State of Texas and of Orgain, Bell & Tucker, Bond Counsel . 24 . Tax Exemption. (a) General Tax Covenant. The City intends that the interest on the Bonds shall be excludable from gross income for purposes of federal income taxation pursuant to Sections 103 and -31- F 141 through 150 of the Code, and applicable regulations . The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the interest on the Bonds to be includable in gross income, as defined in Section 61 of the Code, of the holders thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Section 24; provided, however, that the City shall not be required to comply with any particular requirement of this Section 24 if the City has received an opinion of nationally recognized bond counsel ( "Counsel ' s Opinion" ) that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or if the City has received Counsel ' s Opinion to the effect that compliance with some other requirement set forth in this Section 24 will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel ' s Opinion shall constitute compliance with the corresponding requirement specified in this Section 24 . (b) Use of Proceeds . The City covenants and agrees that its use of the Net Proceeds of the Bonds will at all times satisfy the following requirements : ( i) The City will limit the amount of original or investment proceeds of the Bonds to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than 10% of the Net Proceeds of the Refunded Bonds ( "private-use proceeds" ) . For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit; ( ii) The City will not permit more than 5% of the Net Proceeds of the Bonds to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purposes of the Bonds . Further, the amount of private-use proceeds of the Bonds in excess of 5% of the Net Proceeds thereof ( "excess private-use proceeds" ) did not and will not exceed the proceeds of the Bonds expended for the governmental purpose of the Bonds to which such excess private-use proceeds relate; -32- ( iii) No person using more than 10% of the Net Proceeds of the Bonds in a trade or business, other than a governmental unit, shall make payments (other than as a member of the general public) , directly or indirectly accounting for more than 10% of the principal of and interest on the Bonds ; and ( iv) The City will not permit an amount of proceeds of the Bonds exceeding the lesser of (a) $5,000,000 or (b) 5% of the Net Proceeds of the Bonds, to be used, directly or indirectly, to finance loans to persons other than governmental units; When used in this Section 24 , the term "Net Proceeds" of the Bonds shall mean the proceeds from the sale of the Bonds, including investment earnings on such proceeds, less accrued interest, if any. (c) No Federal Guaranty. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Bonds to be "federally guaranteed" within the meaning of Section 149 (b) of the Code and applicable regulations thereunder, except as permitted by Section 149 (b) ( 3) of the Code and such regulations . (d) No-Private Activity Bonds . The City covenants and agrees to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of Section 141(b) of the Code. (e) No-Arbitrage Covenant. The City shall certify, through an authorized officer, employee or agent, that based upon all facts and estimates known or reasonably expected to be in existence on the date the Bonds are delivered, the City will reasonably expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code and applicable regulations thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Bonds, regulate investments of such proceeds and amounts, and take such other and further action as may be required so that the Bonds will not be "arbitrage bonds" within the meaning of Sections 148(a) and 149 (d) of the Code and applicable regulations thereunder. ( f) Arbitrage Rebate. The City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Bonds (within the meaning of Section 148 ( f) ( 6 ) (B) of the Code) , will be rebated to the federal government. Specifically, the City will ( i) maintain records regarding the investment of the gross proceeds of the Bonds as -33- Y may be required to calculate the amount earned on the investment of the gross proceeds of the Bonds separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, ( ii) calculate at such times as are required by applicable regulations, the amount earned from the investment of the gross proceeds of the Bonds which is required to be rebated to the federal government, and ( iii) pay, not less often than every fifth anniversary date of the delivery of the Bonds, and within 60 days after the retirement of the Bonds, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into an arrangement with respect to the gross proceeds of the Bonds that might result in a "prohibited payment" within the meaning of Temp. Treas . Reg. S 1 . 103-15AT. In order to facilitate compliance with the covenant set forth in this Subsection ( f) , a "Rebate Fund" is hereby established by the City for the sole benefit of the United States of America, and such fund shall not be subject to any claim of any other person, including without limitation the Holders of the Bonds . The Rebate Fund is established for the additional purpose of compliance with Section 148 of the Code. (g) Information Reporting. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Bonds are issued, an information statement concerning the Bonds, all under and in accordance with Section 149 (e) of the Code and applicable regulations thereunder. 25 . Application of Proceeds . Proceeds from the sale of the Bonds shall, promptly upon receipt by the City, be applied as follows : (a) Accrued interest, if any, shall be deposited into the Junior Lien Bond Interest and Sinking Fund; (b) As and when received, proceeds from the sale of the Bonds shall be deposited in the Junior Lien Bond Construction Fund; and all amounts so deposited in the Construction Fund shall be used solely to provide for acquisitions, extensions, construction, improvement or repair of the System as described in Section 3 of this Ordinance on or prior to February 28, 1995, and to pay the costs of issuing the Bonds; and (c) Any remaining investment earnings from the Bonds shall be deposited into the Junior Lien Bond Interest and Sinking Fund. -34- 26 . Special Covenants of the City. (a) TWDB Rules . In compliance with the published rules and regulations of the TWDB, the City covenants and agrees that upon final completion of the project to be financed with the proceeds of the Bonds, and if all or any portion of the Bonds shall be held by or on account of the TWDB or the State of Texas, the proper officials of the City shall render due and final accounting to the TWDB of the total cost of the project. If, following completion of the project, funds remain on hand in the Construction Fund, or if the Development Fund Manager from the TWDB disapproves construction of any portion of the project as not being in accordance with the plans and specifications, the City shall , immediately after filing the final accounting, return to the TWDB the amount of such excess and/or the cost as determined by the Development Fund Manager for the TWDB relating to the parts of the project not constructed in accordance with the plans and specifications, to the nearest multiple of $5, 000, and the TWDB shall thereupon cancel and deliver to the City, in inverse numerical order, a like amount of Bonds held by the TWDB. Any further amounts remaining in the Construction Fund thereafter shall be promptly deposited by the City in the Junior Lien Bond Interest and Sinking Fund and applied to the payment of the principal of and interest on the Bonds . Unless otherwise stated in the loan commitment of the TWDB with respect to purchase of the Bonds, in determining the amount of available funds for constructing the project to be financed, the City shall account for all moneys in the Construction Fund, including all loan funds extended by the TWDB, all other funds available from the project as described in the project engineer' s sufficiency of funds statement required for closing the TWDB' s loan, and all interest earned by the City on money in the Construction Fund. This requirement shall not be interpreted as prohibiting the TWDB from enforcing such other rights as it may have under law. (b) Audit. So long as any of the Bonds are held by the TWDB, the City shall provide to the TWDB' s Development Fund Manager a copy of an annual audit of the City' s finances . (c) Plans . The City covenants that "as built" plans shall be provided to the TWDB, and that so long as any Bonds are held by the TWDB, the City will abide by the TWDB' s rules and the relevant statutes of the State of Texas, including Chapters 15, 16 and 17 of the Texas Water Code. (d) Escrow Agreement. To facilitate delivery of the Bonds in installments, as required by the TWDB' s procedures for purchase under the State Revolving Fund Program, the delivery of and payment for the Bonds shall be accomplished pursuant to an Escrow Agreement to be entered into by and between the City and Ameritrust Texas, N.A. , Houston, Texas, as Escrow Agent, which shall be substantially in the form presented at this meeting, the -35- terms and conditions of which are hereby approved, subject to such insertions, additions and modifications as shall be necessary to comply with all applicable laws, regulations and procedures and to carry out the intent and purposes of this Ordinance. The Mayor or Mayor Pro Tem and the City Clerk or Assistant City Clerk are hereby authorized to execute and deliver the Escrow Agreement in multiple counterparts on behalf of the City and such execution and delivery shall be conclusive evidence of the City' s approval of the terms and provisions of the Escrow Agreement. 27 . Related Matters . To satisfy in a timely manner all of the City' s obligations under this Ordinance and the Escrow Agreement, the Mayor or Mayor Pro Tem, the City Clerk or an Assistant City Clerk, and all other appropriate officers and agents of the City are hereby authorized and directed to take all other actions that are reasonably necessary to effectuate the terms of this Ordinance and the Escrow Agreement and to provide for issuance of the Bonds, including without limitation, executing and delivering on behalf of the City all certificates , consents, receipts, requests, and other documents as may be reasonably necessary to satisfy the City' s obligations under the Escrow Agreement and this Ordinance and to direct the application of funds of the City consistent with the provisions of the Escrow Agreement and this Ordinance. 28 . Registrar. The form of agreement setting forth the duties of the Registrar is hereby approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City. 29 . No Personal Liability. No recourse shall be had for payment of the principal of or premium ( if any) or interest on any Bonds or for any claim based thereon, or on this Ordinance, against any official or employee of the City or any person executing the Bonds . 30 . Open Meeting. It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Article 6252-17, Vernon' s Annotated Texas Civil Statutes, as amended. 31 . Severability. If any section, subsection, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, subsection, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. 32 . Effect of Ordinance. This Ordinance shall be in full force and effect from and after its passage, and it is so -36- ordered. 33 . Repealer. All order, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent of such inconsistency. PASSED AND APPROVED this 3rd day of March, 1992 . Mayor The City of Beaumont ATTEST: A� I City C1 rk The City of Beaumont j tRb. t r/ i -37-